of about $5 billion in overdue payments to Iran.
The debt dates back to last December when India’s Central Bank said it would no longer process payments to Iran.
India said it was unable to find a replacement payment mechanism until last month. The explanation sounded strange—and, in the end, India found a very simple mechanism. Payments are simply made to an NIOC account in a major Turkish bank, Halkbank.
India found that route in just a few days after Iran ceased selling crude oil to Indian refiners. That sounded as if Iran was right to be suspicious that India was just dragging its feet and letting the arrears pile up as long as Iran continued sending crude to India.
There has been no word on whether the United States and other countries are making efforts to cut off the Halkbank link. In February, India made one payment to the NIOC through a German-Iranian bank in Hamburg. Within days, France and the United States successfully pressured the German government to shut down that payment route.
Sources in India told Reuters that that Indian refiners had paid $1.4 billion through Halkbank. In Tehran, NIOC Managing Director Ahmad Qalebani said Monday the NIOC had received $1.4 billion.
Meanwhile, news reports around the world have spoken of other countries in arrears for Iranian oil because US banking restrictions have tied transactions in knots.
One story in the Financial Times of London last month said that $30 billion in oil money was backed up in China. That has been widely denied and appears to have been a false report.
But last week, there was a story from South Korea saying oil payments were stacking up in that country. Reuters quoted an unnamed source as saying the backlog has now reached $3.8 billion.
Reuters later quoted a source at the South Korean Central Bank as saying Iran has been unable to repatriate money it has received from Korean buyers. The source said, “Iran’s Central Bank keeps [in Korea] that money it has received from Korean buyers, including oil refiners, hoping that it can bring the money later when sanctions are lifted.”
That indicated the Korea case was different from India. The Korean buyers are paying the NIOC and it has banked the money in Korea. The Indian buyers simply didn’t pay until last week.
The Indian rupee has weakened in recent days. Reuters said that was because the Indian firms using Iranian oil had to buy so many dollars in such a brief period to make their payments.